Bitcoin Bits: 11 September, 2016

The weekly roundup of crypto tidbits, opinions and currents that caught my attention:

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Some Economists Really Hate Bitcoin: An Overview – by Kyle Torpey

This article had me rubbing my hands in glee. My theory (based on not much other than a nerdish fascination with economic history) is that if it is pissing off economists, it must be worth taking a look at.

Kyle reels off a list of well-known economists that have spoken out against bitcoin, although they have yet to demonstrate that they understand it. From Krugman’s labelling it a “scam” (really? And how’s that, Paul?) to Stiglitz declaring that the US government had managed to shut it down (a slip, no doubt, that will haunt him for many years), most seem to dismiss it as a peripheral fad or as something put in the market to annoy them.

An entertaining article with a gritty bunch of characters… I feel there’s a movie script in here waiting to come out.

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A cryptocurrency thriller made for TV

On Tuesday, Sony released its new series “Startup”, streaming on Crackle, starring Martin Freeman and Adam Brody. It’s about bitcoin. Ok, not really, it’s about idealism and power and relationships and violence. And bitcoin. Only the protagonist is a currency called Gencoin, supposedly better than bitcoin, because bitcoin is open source and therefore susceptible to third party interference.

Hunh?? This article in Fortune has an intriguing excerpt (annoying that the only female VC at the table prefaces her first question with an apology, but that’s entirely off topic). And you’ll see that the arguments for Gencoin vs bitcoin are spurious at best. But whatever, this is TV, and it has Martin Freeman, so I might give it a chance.

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Downside of Bitcoin: A Ledger That Can’t Be Corrected – by Richard Lumb, for the New York Times

Nice try, but no cookies. Richard Lumb from Accenture (the firm is plugged several times in the article – is this branded content?) tries to allege that blockchains are of no interest to financial services if they are immutable, if they can’t be “rewound”, if previous transactions can’t be erased or changed. And for someone from Accenture, who are actively positioning themselves in the pages of the New York Times, to conflate Bitcoin and the private blockchains that banks are looking at, is utterly bewildering.

“One thing is clear: If the financial services industry is to embrace a new technology, it cannot be one in which mischief and mistakes are immutable and fraudsters can defend their actions on spurious ideological grounds.”

This is a narrow way of looking at things. Immutable does not mean “not fixable”. Handing over cash is pretty immutable, right? If it’s in someone’s hands, it’s his? So, you go to the store and you pay for something with cash. You get home to find that it’s defective. You take it back to the store, and they give you your cash back. Immutable, but at the same time, fixable.

Laws. Public blockchains don’t have them, outside the basic functioning of the protocol. Private blockchains can. Fraudulent or erroneous transactions can be reversed without rewriting the blockchain. Just like in the store they can give you your money back without rewinding time.

“The financial services industry needs to face the question of how to balance the appeal of pristine accounting with the demands of the real world, where some things simply need to be struck from the records.”

Why do they “need” to be struck from the records? Again, I question the premise. The “right to be forgotten” ruling applies to information displayed publicly. It does not imply the complete erasure of that information. If someone committed a crime and did the time, that information is not going to be simply erased from all records everywhere, just because the person in question manages to get it struck from all public records and search engines. Private blockchains, such as those that financial services are looking at, can hold whatever information they want. They just can’t make it public. But since that is most likely not part of their business model, I don’t see the conflict.

No disrespect meant to the New York Times, but if they are going to blatantly plug a firm’s services in an op-ed, shouldn’t the veracity of the firm’s insight be vetted first? This article was harmless, but neither party came out looking good.

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Blockchain Requires Radical Change, Not Compromise – by Frances Coppola for CoinDesk

An inspiring article by Frances Coppola, in my opinion one of the most insightful financial journalists out there.

“I was left wondering what was so great about a distributed ledger when it simply distributes the functions of the present system over multiple computers.”

In this article for CoinDesk, she points out that most blockchain applications are missing the big opportunity: to radically re-think how we do things. Most just to try to improve existing processes. Which is ok, unless you consider that once the processes are passed over to the blockchain, we won’t collectively get this thinking-outside-the-box opportunity again until the next technological revolution comes along.

“To use radical new technology effectively, you have to be radical – otherwise, all you end up with is a retro-fitted version of the present system.

The benefits of the new technology are watered down or overwhelmed by the need to maintain the practices associated with the old system – many of which only exist precisely because of its inefficiencies. The new technology can even seem less efficient than the old one, simply because it isn’t designed for use with processes from the past.”

So let’s not waste it.

“The real benefits from DLT will come not from re-engineering capital markets as they currently function, but from re-imagining capital markets for a radically different future.”

If only…

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Nothing to do with cryptocurrencies, but I couldn’t resist sharing these with you… They’re cakes. Yes, cakes. Created by former architect and current genius Dinara Kasko, these are definitely way to amazing to eat.

by Dinara Kasko, via mymodernmet
by Dinara Kasko, via mymodernmet
by Dinara Kasko, via mymodernmet
by Dinara Kasko, via mymodernmet
by Dinara Kasko, via mymodernmet
by Dinara Kasko, via mymodernmet
by Dinara Kasko, via mymodernmet
by Dinara Kasko, via mymodernmet

Check out more (they’re all unbelievable) at

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There’s a $500 billion remittance market, and Bitcoin startups want in on it – by Luis Buenaventura, for Quartz

Wow. Apparently about 20% of Korea-Philippine remittances are now done using bitcoin.

I wrote a while ago about how hard I thought it would be for bitcoin to make a dent in this lucrative and logistically difficult market. Which I thought was a great pity, given the potential to lower costs for people who really need it. But apparently the proliferation of smartphones is smoothing the way. That, combined with a flurry of startups looking to enter the space, is convincing people to give it a try. Especially since many of the current users don’t even know that it is bitcoin they’re using.

“Senders pay for their transactions in local currency, and the cash is converted into bitcoins before being transmitted to the destination country. Once there, the bitcoins are converted into the local currency of the beneficiary. The facilitating company takes a cut during the currency exchange, as with a traditional provider, and neither customer is necessarily aware that bitcoins were involved.”

We need to bear in mind that this article was written by the co-founder of one of the Philippines’ most prominent bitcoin remittance startups, but he left the startup and its parent company Satoshi Citadel Industries (briefly mentioned in the article) last year. He is currently working on blockchain and other tech solutions for remittance companies, and so it’s possible that his rosy-tinted view on the outlook for the remittance sector is influenced by his need for the outlook to be rosy. But, it’s also probably safe to assume that he has access to better information than most of us. And if he didn’t believe the outlook to be rosy, he wouldn’t be working in the sector. However, the prospects may be not quite so potentially lucrative for both sides of the table as he claims. The path to mainstream adoption will be difficult and bumpy, and that’s even before regulators decide to step in and take their slice. To Luis’ credit, he seems to recognize this:

“Because of their customers’ dependence on hard currency, remittance providers must also have cash-out partners in every town and district, which tacks on additional costs and introduces security risks. Digital currency can’t magically transform into paper money when you need to buy vegetables at the local market, or pay transit fare to get your kids to school.”

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Enjoy what’s left of your weekend! And give ’em hell next week…

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